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Proposition AA receives mixed reviews

Supporters of marijuana legalization approve of taxes, but some say proposed taxes are 'excessive'

By Saja Hindi For the Reporter-Herald

Posted:
11/05/2013 03:38:59 PM MST

Colorado's Proposition AA, which adds taxes to marijuana sales and will appear on the ballot Nov. 5, is receiving mixed reviews from proponents of marijuana legalization. This proposition calls for a 15 percent excise tax on recreational marijuana sales and a 10 percent sales tax, in addition the state's standard 2.9 percent sales tax and any local taxes residents pay.

While money from the excise tax will go toward funding school construction, revenue from the sales tax will fund state regulatory enforcement on the marijuana retail business.

Michael Elliot, executive director of the Medical Marijuana Industry Group in Colorado, said his organization is one of the biggest contributors to the campaign.

"We see this as a pretty reasonable way to go forward, and primarily, that we need funding available to make sure this program works, to make sure the enforcement division has the money it needs to work properly, and also to have the funding available to target public safety issues that come up," he said.

Elliot said after the federal government's decision not to sue Colorado, this is an opportunity for states like Colorado that legalize marijuana to prove that state governments can handle this issue reasonably and responsibly.

Deputy U.S. Attorney General James Coles issued a memo in August allowing states to legalize medical and recreational marijuana, dependent upon their regulation and enforcement measures and effectiveness.

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While the passage of Amendment 64 allows for the purchase of retail and medical marijuana beginning in January, it allows for cities and counties to make their own decisions regarding the sales. Authorized retail marijuana businesses will be able to open early next year in unincorporated parts of Larimer County, for example, but in Fort Collins, recreational marijuana establishments will have to wait until the end of March 2014. In Loveland, marijuana retailers, businesses and commercial growers are banned.

Donald Cruickshank, owner of a Kind Place - a licensed medical marijuana dispensary in Fort Collins, said he has mixed feelings about Proposition AA.

"If you put a tax on a retail like that, it's going to be hard for any business to make it," he said.

While Cruickshank said he understands the need to tax and he agrees with the premise, because the amount is excessive, he worries that after the novelty of legalization wears off, people will get tired of paying the increased amount.

"If the price goes up, people will go back to the street," Cruickshank said.

Sean McAllister, spokesperson for Colorado's chapter of the National Organization for the Reform of Marijuana Laws (NORML) and criminal defense and DUI attorney, shares Cruickshank's sentiments.

"It is excessive taxation that amounts to three to four percent of alcohol taxation," McAllister said. "This is a betrayal of the voters' vote last November who wanted marijuana treated like alcohol."

McAllister said because of the high taxes - 15 percent special sales tax, 7.5 to 8 percent regular state tax, and 3 to 5 percent taxes in Denver and Boulder - the black market will pick up again in Colorado, and people may not go out of their way to avoid selling marijuana in their basements near children.

"It will undermine the goal that the initiative set out to do and will keep marijuana closer to kids and more unregulated," he said.

According to McAllister, the state's current sales tax is enough for regulation, and he said the state should have brought voters two initiatives, one on the 15 percent excise tax and one to discuss an appropriate rate on the sales tax.

Keith Strop, Legal Counsel for NORML's headquarters in Washington, D.C., said from polling results, it seems that the initiative is likely to pass.

"Our position is simply a principled one that they were piling on and adding taxes that are excessive," Strop said.

But Strop kept a positive outlook, referring to a Gallup poll that showed 58 percent of voters support legalizing marijuana nationwide, a 10 percent increase from a year ago.

"I have no doubt that's the result of the successful initiatives in Colorado and Washington," Strop said.

Marijuana smokers only make up about 13 to 14 percent of Americans nationally, Strop said, but support of legalization is still increasing.

According to Strop, marijuana users sometimes forget that "we are winning this battle not because we enjoy the support of marijuana smokers ... we are winning this issue because now, we are enjoying the support of non-smokers."

Strop said, in the larger scheme, although the tax amount is significant, the principle issue is to stop treating marijuana users as criminals.

"Without question, if you ask marijuana smokers, they would prefer legalization and to pay higher taxes than for marijuana use to be illegal," he said.

For Elliot, he said he believes this issue is an evolving one, referencing the Department of Revenue's audit this year.

"It was a low point for the marijuana movement. There was certainly some bad decision spending made by DOR - a lot of it can just be attributed to growing pains that no one's ever done this before," he said.

And these new taxes might be the solution, according to Elliot.

"One of the biggest issues was the lack of funding, that they didn't have the staff they needed, that they were behind in enforcement, and we really don't want that to happen again," he said.

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